IMF highlights $25 billion yearly boost needed for Africa’s energy transition
Deputy Managing Director of IMF, Mr Bo Li. PHOTO | FILE
What you need to know:
- The IMF’s Resilience and Sustainability Trust (RST) has emerged as a crucial initiative to support African countries in addressing their energy and climate challenges.
Dar es Salaam. The International Monetary Fund (IMF) has said a modest investment of $25 billion annually in Africa’s renewable energy sector could increase electricity production by 20 percent.
With renewable energy being at the heart of Africa’s potential for economic growth, poverty reduction, and sustainability, the Deputy Managing Director of IMF, Mr Bo Li, noted that investment can as well boost GDP growth by 0.8 percent each year over the next decade.
Speaking at The Mission 300 Africa Energy Summit in Dar es Salaam, Bo Li outlined the critical role of renewable energy in transforming the continent.
He emphasized to the more than 1,000 delegates at the Julius Nyerere International Convention Centre (JNICC) that African governments must take the lead in creating an environment that attracts sustainable financing.
“Strengthening governance and transparency, implementing sound regulations, and enacting reforms are vital to increasing sustainable finance flows,” he said, pointing to tools like power-purchase agreements, feed-in tariffs, and renewable energy targets as ways to assure investors of future returns.
The IMF’s Resilience and Sustainability Trust (RST) has emerged as a crucial initiative to support African countries in addressing their energy and climate challenges.
“Our $48 billion RST helps vulnerable nations build resilience,” said Bo Li. “So far, we have approved $10 billion for 21 countries, more than half of which are in Africa.”
He added that the IMF’s support goes beyond providing capital.
“Our efforts help countries design and implement policy reforms that catalyse additional investments. Renewable energy is a win-win—it drives energy transitions and builds resilience without the need for expensive electricity grids,” he noted.
Africa’s renewable energy potential is vast, from solar fields in the Sahara to wind corridors in East Africa. However, access to affordable capital remains a significant barrier.
“External financing is essential,” said Bo Li. “Relying solely on domestic financing can crowd out other critical development investments.”
An energy economist from Kenya, Dr Paul Hinga, commended the IMF’s commitment but noted that substantial challenges remain.
“The IMF’s readiness to fund renewable energy is a game-changer for Africa. However, the effectiveness of these funds depends on how well countries implement the necessary reforms,” he said.
“Governments must prioritise policy alignment and transparency to attract both public and private investments.”
Dr Hinga added that Africa’s energy sector requires a balance of external and domestic investments to ensure sustainable growth.
“While external financing bridges gaps, governments must develop domestic capital markets and encourage local participation,” he said.
On the technical side, a renewable energy consultant based in South Africa, Ms Linda Mwase, highlighted to The Citizen at the corridors of the summit, the importance of regional cooperation.
“Africa’s renewable energy resources are immense, but they are unevenly distributed,” she explained. “For example, North Africa has abundant solar potential, while Southern Africa is rich in wind resources. Collaboration across borders is essential to maximise these opportunities.”
Ms Mwase also urged governments to focus on long-term energy policies. “The IMF’s emphasis on policy reforms is critical. Stable, predictable regulatory environments will encourage investment and ensure that renewable energy projects have lasting impacts,” she said.
The Mission 300 Africa Energy Summit has provided a platform for leaders and stakeholders to chart a path forward for the continent’s energy transition. Bo Li noted that the IMF stands ready to work with African countries to achieve universal energy access.
“The IMF is committed to securing affordable financing, increasing renewable energy access, and establishing policies that enable countries to attain their energy goals,” he said. “This isn’t just about capital—it’s about creating systemic change.”
The IMF estimates that achieving universal energy access could unlock significant economic benefits, including improved job creation and social stability. “Universal, reliable, and sustainable energy is one of the most important requirements for Africa’s economic growth and development,” Bo Li emphasised.
The IMF’s approach goes beyond financing. By collaborating with governments, the organisation helps establish policies that promote transparency, accountability, and efficient resource allocation. This ensures renewable energy projects deliver maximum impact.
“This is a defining moment for the continent. Africa’s renewable energy potential is vast, and with the right investments and policies, we can create a sustainable, prosperous future for all,” he said.
Experts agreed that while the IMF’s support is pivotal, success will require strong leadership, regional cooperation, and solid commitment from African nations.
As the summit continues, delegates remain optimistic about Africa’s energy future. With global partners like the IMF stepping in to provide financial and technical support, the continent has a unique opportunity to lead the global energy transition.
